In brief
• Our central expectation is that President Trump’s policy agenda will
be growth supportive. But there are risks, particularly if the balance
of fiscal stimulus, tariffs and immigration curbs prompt more
inflation than real growth.
• A renewed focus on ‘America first’ policies will require responses
from other regions, notably Europe and China, where large scale
monetary and/or fiscal stimulus is expected.
• For equity market leadership, how the technology boom evolves
is more important than who is in the White House. We think the
best of the tech gains have been had, and as these technologies
proliferate around the broader economy the next stage of the
technology evolution will lift asset prices elsewhere in the global
stock index.
• It’s tempting to believe that Trump’s re-election will reinforce US
outperformance. But it’s worth remembering that expectations
embedded in European stocks are already low and it’s not just
what you buy, it’s how much you pay for it. We like the UK market
in particular.
• For multi-asset investors, today’s investment landscape demands
that we re-think diversification, incorporating bonds for income
and recession protection, but also assets that will perform well
during inflation shocks